Institute for Health Policy Studies CPAC California Program on Access to Care White Paper: Impact of National Health Care Reform on California’s Demand for Health Professionals Janet M. Coffman, MA, MPP, PhD Philip R. Lee Institute for Health Policy Studies University of California, San Francisco Janet.Coffman@ucsf.edu

Introduction The Patient Protection and Affordable Care Act (PPAC) present great opportunities and great challenges for California Large increase in the number of Californians with health insurance Authorizes additional funding for health workforce development Compounds the workforce challenges facing California’s health care organizations

California’s Health Workforce Challenges Shortages of health professionals Maldistribution of health professionals Constraints on capacity of educational programs New requirements for clinical doctorates in some fields Scope of practice laws Reimbursement policies The recession

Individual Mandate Beginning in 2014, PPAC will require most Americans to obtain health insurance or pay a tax penalty

Current Distribution of Californians by Health Insurance Status Source: Lavarreda et al., UCLA, 2010

Changes in Medi-Cal Eligibility expanded to include all non-elderly adults and children in families with incomes up to 133% of the Federal Poverty Level Expansion may begin as early as 2010 and must begin in 2014 An estimated 1.9 million more Californians would be eligible in 2016 (Jacobs et al., 2010) Greatest impact on childless, non-elderly adults

Changes in Privately Purchased (i.e., Individual) Insurance A Temporary High Risk Pool will be established in summer 2010 for persons with pre-existing conditions who have been uninsured for at least 6 months (complements existing program) Beginning in 2014 insurers will be Required to offer coverage to all persons regardless of health status Prohibited from excluding pre-existing conditions or charging higher premiums to persons who have them

Changes in Privately Purchased (i.e., Individual) Insurance Requires states to establish health insurance exchanges by 2014 Provides subsidies to persons in families with incomes between 133% and 400% of poverty for purchase of coverage through an exchange An estimated 4.7 million Californians will be eligible to purchase coverage through the exchange in 2016 (Jacobs et al., 2010) 2.5 million eligible for subsidies 2.2 million eligible for unsubsidized coverage

Changes in Employment-based Insurance Greatest impact on small employers Beginning in 2010, employers with ≤ 25 FTE employees with average wage ≤ $50,000 will also be eligible for tax credits Beginning in 2014, firms with < 100 employees may purchase coverage through an exchange An estimated 3.8 million Californians would be affected in 2016 (Jacobs et al., 2010)

Changes in Employment-based Insurance Effects on large employers Beginning in 2014, penalties charged to firms with > 50 employees that do not offer health insurance whose employees are eligible for subsidies for purchase of coverage through the exchange Beginning in 2018, tax on “Cadillac” health plans

Changes in Medicare No changes in eligibility Some modest changes in premiums for coverage of physician services and pharmaceuticals Establishes office within CMS to coordinate Medicare and Medicaid benefits for dual eligibles

Increasing the Number of Californians with Health Insurance Will Increase Demand for Care Multiple studies have found that persons with health insurance use more health care services than persons who are uninsured Greatest differences in use Preventive services Physician visits Prescription drugs Sources: Freeman et al, 2008; IOM, 2009

Reduction in Cost Sharing Will Increase Demand for Care Among Some Persons with Health Insurance Some persons who purchase coverage through an exchange will face lower deductibles, coinsurance, and/or copayments Insurers will be required to cover preventive services recommended by the US Preventive Services Task Force without cost sharing Multiple studies have found that reducing cost sharing increases use of health care services Sources: Faulkner and Schauffler, 1997; Goldman et al., 2007; Newhouse, 1993

Lack of Assistance for Undocumented Immigrants Will Attenuate the Increase in Demand The PPAC does not require undocumented immigrants to obtain health insurance and does not improve their access to insurance An estimated 18.9% of uninsured Californians are undocumented immigrants (Jacobs, et al., 2010) Undocumented immigrants rely heavily on safety net providers for care

Option to Pay a Penalty May Limit the Increase in Persons with Health Insurance and Demand for Care Some persons subject to the individual mandate may choose to pay a fine rather than buy coverage The maximum fine (2.5% of taxable income) will be lower than the cost of health insurance Persons who choose to remain uninsured will demand less care may delay seeking care until health problems become severe

Impact of Major Changes in Medicare Reimbursement is Uncertain PPAC will reduce annual updates in Medicare reimbursement rates for multiple types of services Restructuring payments to Medicare Advantage plans will have a greater impact on California than most states because 34% of Medicare beneficiaries in California are enrolled in these plans (Kaiser State Health Facts, 2010) Reductions in Medicare and Medicaid disproportionate share payments will have large effects on safety net hospitals’ revenue

Incentives for Changing the Delivery System are Modest PPAC authorizes the Centers for Medicare and Medicaid Services to test innovations in reimbursement (e.g., bundled payment, medical home) but it is unclear whether these demonstration projects will be taken to scale. Many delivery system reform initiatives (and workforce initiatives) will be subject to annual appropriations – may be difficult to secure adequate funding in an era of increasing concern about the deficit.

Implications for California’s Health Workforce Needs Increase in demand for all types of health professionals Greatest increases in demand among health professionals who provide preventive, primary care, and disease management services Primary care providers Laboratory personnel Imaging personnel Pharmacists and pharmacy technicians

Implications for California’s Health Workforce Needs Increase in demand for health professionals will vary across California The percentage of the population that is uninsured is greatest in inner city and rural areas Many of these areas had shortages of health professionals before PPAC was enacted Impact attenuated in some of these areas due to high percentages of undocumented immigrants

Implications for California’s Health Workforce Needs Increase in demand for health professionals may vary across organizations providing care Many persons who will be newly insured currently obtain care from safety net providers Some will remain uninsured Unclear whether those who obtain health insurance will shift to other providers Cuts in Medi-Cal and Medicare disproportionate share payments may limit safety net hospitals’ demand for health professionals

Implications for California’s Health Workforce Needs Effects on the manner in which health professionals are utilized may be small because Most innovations in reimbursement and models of care are limited to grants and demonstration projects PPAC does not address state scope of practice laws

COMMENTS AND QUESTIONS